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2013 (10) TMI 205 - AT - Service TaxService tax on Works Contract - Section 65(105)(zzzza) - Whether works contract service is chargeable to service tax, prior to 1.6.2007 - Held that - since there is a conflict of opinion between Larger Bench decisions of this Tribunal in Jyoti Ltd. Vs. CCE 2007 (12) TMI 20 - CESTAT, AHMEDABAD ; CCE Vs. Indian Oil Tanking Ltd. 2007 (8) TMI 180 - CESTAT, MUMBAI and CCE Vs. BSBK Ltd. 2008 (10) TMI 33 - CESTAT NEW DELHI , it is appropriate that in the interests precedential coherence, the issue whether a composite contract, involving transfer of property in goods and services which is taxable only from 1.6.2007, onwards and not earlier thereto, in view of the provisions of Section 65(105)(zzzza), could be vivisected and service components of such composite contract could subjected to tax by classification of such service components under other pre-existing taxable services such as commercial or industrial construction service or erection, installation and commissioning service, construction of residential complex service etc. for the period prior to 1.6.2007, must be referred to a larger bench of five members. Accordingly, we direct the Registry to place the papers before the Hon ble President, for an appropriate decision.
Issues Involved:
1. Whether works contract service is chargeable to service tax prior to 1.6.2007. 2. Conflict between decisions of various Larger Benches on the taxability of works contract service before 1.6.2007. 3. Validity and impact of judgments delivered by a third member resolving conflicts in Division Bench decisions. 4. The necessity of referring the issue to a Larger Bench of five members. Detailed Analysis: 1. Chargeability of Works Contract Service to Service Tax Prior to 1.6.2007: The primary issue is whether works contract service was subject to service tax before 1.6.2007. With the introduction of Section 65(105)(zzzza) by the Finance Act, 2007, service tax was explicitly levied on services related to the execution of a works contract from 1.6.2007 onwards. Before this date, services provided under turnkey agreements were taxed under other specified taxable services such as commercial or industrial construction service. 2. Conflict Between Decisions of Various Larger Benches: The application highlights a conflict between two Larger Benches, namely, Jyoti Ltd. Vs. CCE and CCE Vs. Indian Oil Tanking Ltd., which held that works contract service was not independently taxable prior to 1.6.2007. Conversely, the Larger Bench in CCE Vs. BSBK Ltd. held that the service elements of a composite works contract could be segregated and taxed under pre-existing taxable services. This conflict necessitates a resolution to ensure doctrinal stability. 3. Validity and Impact of Judgments Delivered by a Third Member Resolving Conflicts in Division Bench Decisions: The judgment discusses the nature of decisions delivered by a third member in resolving conflicts in Division Bench decisions. According to the Delhi High Court in Puri (P.C.) Vs. Commissioner of Income Tax, such decisions are considered as judgments of a full bench. Thus, judgments resulting from a third member's resolution of a conflict are treated as decisions of a Larger Bench, having the same efficacy as if three members had sat en banc. 4. Necessity of Referring the Issue to a Larger Bench of Five Members: Given the existing conflict between the decisions of three-member benches in Jyoti Ltd., Indian Oil Tanking Ltd., and BSBK Pvt. Ltd., the Tribunal finds it necessary to refer the matter to a Larger Bench of five members. This referral aims to resolve whether a composite contract involving both goods and services, which became taxable from 1.6.2007, could be vivisected and taxed under pre-existing taxable services for the period before 1.6.2007. Conclusion: The Tribunal directs the Registry to place the papers before the Hon'ble President for an appropriate decision, emphasizing the need to resolve the conflict in precedents to maintain doctrinal stability. The contention that referring the issue to a Larger Bench of five members would prejudge the discretion of a third member is rejected, as resolving conflicts in precedents is essential for judicial consistency.
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